Friday, June 03, 2011

YRCW Teamsters Scrape Out Pension Contributions After All

So this is what the fuss was all about.  YRCW is still losing money and yet resumes contributions to the Teamsters' pension plan instead of focusing its cash on operations.  Contributing $21mm per quarter is a meaningful chunk of the company's current burn rate and is precisely 21% of the new capital they are supposed to arrange from restructuring their debt.  The Teamsters never took their eyes off the prize; by agreeing to a debt restructuring, they ensured they would be able to further pillage the company of cash while it continues to spiral down the tubes.  Greed wins again. 

If the company had chosen to file for bankruptcy months ago, it could have torn up that horrendous agreement with the Teamsters and start fresh with a new agreement giving them exactly zero pension contributions.  That is now a missed opportunity and YRCW's other creditors will be poorer for it. Trucking companies with their eyes open can now see exactly what happens when union members get board seats.  The unionized workforce will always put its own needs ahead of the company's, even at the risk of their employer's survival.  Heads up, Arkansas Best (ABFS) . . . you could be next.

Full disclosure:  No position in YRCW or ABFS.  I have better places to put my capital to work than in unionized companies.